Question 1

Figure 16-3
  
-Refer to Figure 16-3.Which of the following movements represents the recovery phase?

Accepted Answer

A) the movement from A to B 
B) the movement from B to C 
C) the movement from C to D 
D) the movement from C to B 
A) the movement from A to B 
B) the movement from B to C 
C) the movement from C to D 
D) the movement from C to B

Question 2

In the short run and in the long run, there is a tradeoff between inflation and unemployment.

Accepted Answer

A) True 
 B)False

Question 3

Frictional unemployment exists because

Accepted Answer

A) the quantity demanded of labor exceeds the quantity supplied at the equilibrium wage rate. 
B) of fluctuations in economic activity. 
C) technological changes make the skills of the workers incompatible with the skills used on the job. 
D) it takes time for people seeking jobs and employers seeking workers to find each other. 
A) the quantity demanded of labor exceeds the quantity supplied at the equilibrium wage rate. 
B) of fluctuations in economic activity. 
C) technological changes make the skills of the workers incompatible with the skills used on the job. 
D) it takes time for people seeking jobs and employers seeking workers to find each other.

Question 4

In the 1960s and early 70s, economists believed that the Phillips curve indicated that policymakers could choose the mix of inflation and unemployment they were willing to accept and achieved this with appropriate fiscal and monetary policies.

Accepted Answer

A) True 
 B)False

Question 5

The recovery phase of the inflation-unemployment cycle emerges if

Accepted Answer

A) prices and wages are flexible. 
B) nominal wages and prices rise. 
C) resource prices are higher. 
D) policymakers respond to a recessionary gap by increasing aggregate demand. 
A) prices and wages are flexible. 
B) nominal wages and prices rise. 
C) resource prices are higher. 
D) policymakers respond to a recessionary gap by increasing aggregate demand.

Question 6

The notion that there is a tradeoff between inflation and unemployment is expressed as a

Accepted Answer

A) Phillips curve. 
B) Keynes curve. 
C) Schumpeter curve. 
D) Friedman curve. 
A) Phillips curve. 
B) Keynes curve. 
C) Schumpeter curve. 
D) Friedman curve.

Question 7

Structural unemployment is best reduced by

Accepted Answer

A) job training programs to retool workers with new skills. 
B) improved job-market information. 
C) an increasing unemployment compensation benefits. 
D) offering above equilibrium wages to attract workers. 
A) job training programs to retool workers with new skills. 
B) improved job-market information. 
C) an increasing unemployment compensation benefits. 
D) offering above equilibrium wages to attract workers.

Question 8

Figure 16-7
  
-Refer to Figure 16-7.At point 4, if policymakers are concerned about economic performance, they will most likely respond by

Accepted Answer

A) increasing government purchases and the money supply. 
B) increasing taxes. 
C) decreasing aggregate demand. 
D) having the Fed sell bonds. 
A) increasing government purchases and the money supply. 
B) increasing taxes. 
C) decreasing aggregate demand. 
D) having the Fed sell bonds.

Question 9

The notion that there is a tradeoff between inflation and unemployment is expressed as an efficiency wage curve.

Accepted Answer

A) True 
 B)False

Question 10

In the recovery phase of the inflation-unemployment cycle, a falling rate of inflation means That the price level is

Accepted Answer

A) falling. 
B) falling at an increasing rate. 
C) rising by smaller and smaller percentages. 
D) falling at a constant rate. 
A) falling. 
B) falling at an increasing rate. 
C) rising by smaller and smaller percentages. 
D) falling at a constant rate.

Question 11

If workers and firms adjust their expectations of future prices in a higher price level, the short-run aggregate supply curve shifts to the right.

Accepted Answer

A) True 
 B)False

Question 12

The Phillips phase of the inflation-unemployment cycle drives the price level

Accepted Answer

A) below what workers and firms expected causing nominal wages to fall below their expected level. 
B) below what workers and firms expected causing real wages to rise above their expected level. 
C) above what workers and firms expected causing nominal wages to rise above their expected level. 
D) above what workers and firms expected causing real wages to fall below their expected level. 
A) below what workers and firms expected causing nominal wages to fall below their expected level. 
B) below what workers and firms expected causing real wages to rise above their expected level. 
C) above what workers and firms expected causing nominal wages to rise above their expected level. 
D) above what workers and firms expected causing real wages to fall below their expected level.

Question 13

Consider the following statement: "President Nixon expressed satisfaction with last year's economic performance.He said that with inflation and unemployment heading down, the nation 'is on the right course'." Which of the following could have caused this phenomenon?

Accepted Answer

A) Economic agents revising their expectations about the price level resulting in the short-run aggregate supply curve shifting to the left. 
B) Expansionary fiscal and monetary policies that shifted the aggregate demand curve to the right. 
C) Increase in money supply which lowered interest rates and shifted the short-run aggregate supply curve to the right. 
D) Expansionary fiscal and monetary policies that shifted the long-run aggregate supply curve to the right. 
A) Economic agents revising their expectations about the price level resulting in the short-run aggregate supply curve shifting to the left. 
B) Expansionary fiscal and monetary policies that shifted the aggregate demand curve to the right. 
C) Increase in money supply which lowered interest rates and shifted the short-run aggregate supply curve to the right. 
D) Expansionary fiscal and monetary policies that shifted the long-run aggregate supply curve to the right.

Question 14

Evidence suggests that all countries with very high _______ also have very high _______.

Accepted Answer

A) inflation rates; money growth rates 
B) unemployment rates; GDP growth rates 
C) GDP growth rates; government budget deficits 
D) government budget deficits; inflation rates 
A) inflation rates; money growth rates 
B) unemployment rates; GDP growth rates 
C) GDP growth rates; government budget deficits 
D) government budget deficits; inflation rates

Question 15

The efficiency-wage theory holds that self-correction in an economy will not automatically eliminate a recessionary gap.

Accepted Answer

A) True 
 B)False

Question 16

In the long run, monetary growth

Accepted Answer

A) can change the unemployment rate only at the cost of increased inflation. 
B) can change the unemployment rate while holding the inflation rate constant. 
C) can promote economic growth. 
D) cannot affect the factors that determine the economy's unemployment rate. 
A) can change the unemployment rate only at the cost of increased inflation. 
B) can change the unemployment rate while holding the inflation rate constant. 
C) can promote economic growth. 
D) cannot affect the factors that determine the economy's unemployment rate.

Question 17

Figure 16-7
  
-Refer to Figure 16-7.Over time, the aggregate supply curve shifts from SRAS1 to SRAS2 Because of

Accepted Answer

A) rising output prices. 
B) economic agents adjust their expectations regarding prices and wages downwards. 
C) a fall in nominal wages. 
D) economic agents adjust their expectations regarding prices and wages upwards. 
A) rising output prices. 
B) economic agents adjust their expectations regarding prices and wages downwards. 
C) a fall in nominal wages. 
D) economic agents adjust their expectations regarding prices and wages upwards.

Question 18

Which of the following characterizes the relationship between inflation and unemployment in the United States?
I.There have been periods in which a clear tradeoff between inflation and unemployment
Seem to exist.
II.There have been periods in which inflation and unemployment rose together.
III.There have been periods in which inflation and unemployment fell together.

Accepted Answer

A) I, II, and III 
B) I and II 
C) I and III 
D) I only 
A) I, II, and III 
B) I and II 
C) I and III 
D) I only

Question 19

The Phillips phase of the inflation-unemployment cycle occurs when both inflation and unemployment increase.

Accepted Answer

A) True 
 B)False

Question 20

The recovery phase of the inflation-unemployment cycle is explained by

Accepted Answer

A) rightward shifts of the short-run aggregate supply curve in response to expansionary policies. 
B) rightward shifts of the aggregate demand curve in response to expansionary policies. 
C) leftward shifts of the short-run aggregate supply curve in response to higher prices. 
D) leftward shifts of the aggregate demand curve in response to higher prices. 
A) rightward shifts of the short-run aggregate supply curve in response to expansionary policies. 
B) rightward shifts of the aggregate demand curve in response to expansionary policies. 
C) leftward shifts of the short-run aggregate supply curve in response to higher prices. 
D) leftward shifts of the aggregate demand curve in response to higher prices.

Exam 31: Macro Inflation and Unemployment

Figure 16-3 -Refer to Figure 16-3.Which of the following movements represents the recovery phase?

In the short run and in the long run, there is a tradeoff between inflation and unemployment.

Frictional unemployment exists because

In the 1960s and early 70s, economists believed that the Phillips curve indicated that policymakers could choose the mix of inflation and unemployment they were willing to accept and achieved this with appropriate fiscal and monetary policies.

The recovery phase of the inflation-unemployment cycle emerges if

The notion that there is a tradeoff between inflation and unemployment is expressed as a

Structural unemployment is best reduced by

Figure 16-7 -Refer to Figure 16-7.At point 4, if policymakers are concerned about economic performance, they will most likely respond by

The notion that there is a tradeoff between inflation and unemployment is expressed as an efficiency wage curve.

In the recovery phase of the inflation-unemployment cycle, a falling rate of inflation means That the price level is

If workers and firms adjust their expectations of future prices in a higher price level, the short-run aggregate supply curve shifts to the right.

The Phillips phase of the inflation-unemployment cycle drives the price level

Consider the following statement: "President Nixon expressed satisfaction with last year's economic performance.He said that with inflation and unemployment heading down, the nation 'is on the right course'." Which of the following could have caused this phenomenon?

Evidence suggests that all countries with very high _______ also have very high _______.

The efficiency-wage theory holds that self-correction in an economy will not automatically eliminate a recessionary gap.

In the long run, monetary growth

Figure 16-7 -Refer to Figure 16-7.Over time, the aggregate supply curve shifts from SRAS1 to SRAS2 Because of

The Phillips phase of the inflation-unemployment cycle occurs when both inflation and unemployment increase.

The recovery phase of the inflation-unemployment cycle is explained by

Economics: the Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Demand and Supply

Macroeconomics: the Big Picture

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Inflation and Unemployment

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Macroeconomics: the Big Picture

Measuring Total Income and Output

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Macro a Brief History of Macroeconomic Thought and Policy

Economic Development

Socialist Economies in Transition

Filters

Evidence suggests that all countries with very high _ also have very high _.

Figure 16-7 -Refer to Figure 16-7.Over time, the aggregate supply curve shifts from SRAS₁ to SRAS₂ Because of